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Lane, JD, CFP, MBA, CRPS

Category: Tax

Satisfied Customers: 12489

Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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I purchased a commercial building in 2011 with a loan.

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I purchased a commercial building in 2011 for 250k with a loan. I sold a 1/3 share of that building in 2014 for 250k but still own the other 2/3. I used 80% of that 250k from the sale to pay down the mortgage. How do I go about figuring out if I had a gain and how to enter the info into Turbo Tax or another similar software. Thanks

Hi,...The mortgage, although a means of financing (buying) property and/or a way to pull cash (equity) out of the property, doesn't come into the capital gain calculation at all...Capital gain is sales price minus basis (and basis is purchase price PLUS improvements MINUS depreciation)...Some software is better to use for this than others. Although I use one of intuit's professional packages for clients, my experience with Turbotax, even years ago, was that it was better (as long as you use the interview method) than others at simply asking the questions from the user to generate the 4797 and schedule D where this is reported....But again the BASIC formula for capital gain or loss is sales price minus purchase price (but that basis that begins with purchase price is increased by any capital improvements to the property and decreased by depreciation)...So that capital gain essentially is what you sold an asset for, mines what you have IN it. ... The mortgage, again, is just how you came up with them money TO buy the property...Finally, if you only sold a partial interest, (say 1/3) them you simply use 1/3 of the basis against your selling price for 1/3 of the property....I hope this has helped....Please let me know if you have any questions at all....If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit That’s the only way JustAnswer will creditus for the work here....Thank you!Lane……I hold a law degree (JD, Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP&reg; and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate & tax advice since 1986.

Thanks, ***** ***** think you are saying based on the 1/3 issue... If I purchased for 250k then 1/3 of basis is 83.3k if I sold that 1/3 for 250k then the gain is the difference (250k-83.3k=166.7k gain?) Thanks

One addition to that ... You have to adjust the basis down for depreciation (whether you took it or not - one of the biggest IRS gotcha's out there) ... on 83. that would be another 2k per year for three years

I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit...That’s the only way JustAnswer will credit us for the work here....But once you do, if this is on the same issue, come back to this same question so you won't be charged for an additional question